We are hearing reports that buying in Auckland has become a little easier. Our feeling is that two factors have had an impact on the housing market.
1. “20% LVR restrictions” made by our central bank late last year which reduced the number of 1st home buyers
2. Talk about a capital gains tax by some political parties spooking conservative investors
The number of houses changing hands every month is hovering under the 2008 peak. It is however almost 50% higher than in 2009 (after the GFC).
Slow down in market but not in price
It may not be clear to some, that a slowdown in price growth does not translate into cheaper houses. While there has been considerable variance in the average rate of house price growth since November 2011, that rate has consistently remained positive. Below is an indication of the annual percentage increase in house prices for Auckland, Canterbury and New Zealand generally. As can be seen, there was a period of negative growth from 2010 to 2011 that does indicate an actual decrease in average prices. However since that time growth in average prices has remained positive (while the rate of that growth has fluctuated)
Without Auckland and Canterbury we have a more subdued growth rate, strangely correlated to the Chinese housing market. This could point to a more global cause, such as an overall increase in money supply.
The horizon
There are a few possible changes which may have an impact on property prices in the near future.
The Reserve Bank
+The central bank indicated that there could be a loosening of the “20% deposit restrictions” towards the end of the year. This might only happen if the market becomes more subdued.
-The central bank has indicated an intention to create some slight hurdles for investors with more than five houses. This will change the way banks price these deals and how much leverage is available.
Elections
-There could be a chance that we enter into capital gains tax era if the red party wins
+If the blue party wins we may see a little rush from investors currently waiting on the sidelines
Other
+Nett migration is up with less New Zealanders going across the ditch
-The unitary plan and the housing accord may increase supply, currently some of the changes are being resisted with residents not favouring living next to large buildings
